ABSTRACT The objective of this renewal grant proposal is to perform preclinical validation of an inhibitor of the low molecular weight protein tyrosine phosphatase (LMPTP) as a therapeutic treatment for obesity-associated diabetes. Diabetes caused by insulin resistance is a major cause of obesity-associated morbidity. The currently available anti-diabetic treatments are often insufficient to maintain glycemic control in type 2 diabetes patients; thus there is a major unmet medical need for agents that lower insulin resistance. Targeting tyrosine phosphatases that inhibit insulin signaling by dephosphorylating the insulin receptor (IR) is considered a potential strategy for treating type 2 diabetes by sensitizing the cellular response to insulin. The tyrosine phosphatase LMPTP inhibits insulin signaling by dephosphorylation of the activation motif of the IR. In humans, genetic polymorphisms encoding low LMPTP activity associate with lower glycemic levels. We discovered that LMPTP is a key promoter of obesity-induced insulin resistance by inhibiting IR phosphorylation in the liver. Mice carrying global and liver- specific LMPTP deletion gain comparable weight to control littermate mice when fed a high-fat diet, however display substantially improved glucose tolerance and lower fasting insulin levels. During the previous grant funding cycle, through a screening of the Molecular Libraries Probe Production Centers Network chemical library followed by an extensive hit-to-lead optimization campaign, we exploited unique structural features of LMPTP to generate a new class of inhibitors that is orally bioavailable, exclusively selective for LMPTP over other tyrosine phosphatases, and lowers insulin resistance and restores glucose tolerance in obese diabetic mice. Our long- term goal is to advance an LMPTP inhibitor to the clinic as a therapeutic option for patients with type 2 diabetes. Thus here we apply for continued grant funding to collect preclinical efficacy and safety data and perform chemical optimization in order to generate a candidate for investigational new drug-enabling studies. We will accomplish this objective by pursuing 3 Specific Aims: 1) validation of the LMPTP inhibitor lead efficacy in human hepatocytes and in mouse models of obesity-induced diabetes; 2) validation of the LMPTP inhibitor lead safety in mice; 3) generation of an optimized LMPTP inhibitor lead through iterative cycles of structure-guided medicinal chemistry.